Minnesota Chamber sues Minneapolis over sick time rules

Minneapolis' efforts to mandate the pay and benefits offered by private employers in the city took a pummeling from businesses on Friday.

The state's largest business association, the Minnesota Chamber of Commerce, sued the city to halt an ordinance requiring businesses to offer sick time to employees. And restaurant owners, in a separate meeting at City Hall, insisted a proposed citywide minimum wage would be more damaging than a recent study says.

"You will shut us down with all the policies that [are] happening," said Saed Wadi, a co-owner of World Street Kitchen, Milkjam Creamery and Saffron restaurants.

The criticism of a proposed citywide minimum wage, which the City Council is expected to consider next year, came as Mayor Betsy Hodges reiterated her view that the issue should instead be tackled as a region.

"I do not believe that raising the minimum wage in Minneapolis alone is the right path, and I'm not convinced that it is the right solution for our local economy," Hodges told business leaders at the City Hall event Friday morning.

The sick time ordinance, passed in May, is slated to go into effect in July 2017. But the chamber is requesting an injunction to stop that and a court order saying the rules are invalid because they conflict with state law.

Under the rules, employers must allow employees to earn one hour of paid sick time for every 30 hours worked, up to 48 hours a year.

"In today's global market, it is not possible to regulate employment terms within private employer-employee relationships and limit those regulations to the boundaries of Minneapolis," the lawsuit says. "Employment regulations inherently permeate those boundaries and result in a ripple effect — if not a tidal wave — throughout Minnesota and beyond."

As an example, the lawsuit pointed to Graco Inc., a manufacturer of pumps and spray equipment that employs people who transfer between divisions inside and outside of Minneapolis.

The new sick-time rules apply just to employees who work 80 hours a year in the city, but "Graco's systems are not equipped to track which city the employees are in on an hour-by-hour basis," according to the lawsuit.

Regarding the conflict with state law, the chamber highlighted a state Supreme Court opinion that "a municipality may not prohibit by ordinance conduct that is not prohibited by statute," which arose in a case involving Minneapolis' use of red light cameras. There is already a state law regulating sick leave, the lawsuit said, and it does not require employers to provide it.

"Minnesota law prohibits cities from enacting ordinances that conflict with state law — but that's exactly what Minneapolis has done," Chamber President Doug Loon said in a statement. "Regardless of how well intentioned the Minneapolis ordinance is, it's unworkable and unlawful, so we've asked the court to strike it down."

City Attorney Susan Segal said she's confident the city can defend the ordinance. And the Main Street Alliance of Minnesota, a coalition of businesses that support the sick-time measure, criticized the chamber's attempt to delay it.

"This lawsuit is being led by a select number of businesses and does not represent many small-business owners who have deep roots in our community," Andy Papacosta, events coordinator at Gandhi Mahal restaurant, said in a statement.

Minneapolis is also exploring a citywide minimum wage of $12 or $15 an hour — which would make it the first city in the state to have its own minimum wage.

A city-commissioned study released last week, led by the Roy Wilkins Center for Human Relations and Social Justice at the University of Minnesota, determined that such a change would have broad benefits for workers with little burden on businesses. The study did not address the potential for businesses to relocate or expand somewhere else in the region.

Restaurateurs pushed back on those findings during their meeting with city staff Friday, offering to give the city payroll information to show the impact of a $15 minimum wage.

"I'm just very concerned that because we have this report there … we're already starting in a conversation that's tilted," said JJ Haywood, CEO of Pizza Lucé, which has three Minneapolis locations.

Multiple restaurateurs, including representatives of Parasole Restaurant Holdings and Zen Box Izakaya, said the city needs to consider their real-life experiences about the complexities of the business.

But the most blunt commentary came from Wadi, who said a $15 minimum wage would increase his labor costs by 40 percent and force him to raise prices.

"It's going to crush us. Because it's not just the minimum wage that's going to affect us," Wadi said. "There's a lot of policies that are happening that will drive us in the red."

Deputy City Coordinator Nuria Rivera-Vandermyde called the session a "healthy discussion" and said the city wants to hear from business owners.

"We also need to hear from workers who are impacted by not being able to provide for their families," she said at the meeting.

Hodges said she has been talking with people across the metro area about a regional wage approach.

"Minneapolis isn't an island," Hodges told business leaders. "And unlike other cities that have raised the minimum wage at the municipal level, we are situated in a regional economy and that must be considered as we look to find ways to improve the lives of workers and our overall economy."

Above: Minnesota Chamber President Doug Loon.

Below: A scan of the lawsuit, filed in district court on October 13.

Minnesota Chamber Sick Time Lawsuit by eric_roper on Scribd

Eric Roper • 612-673-1732

eroper@startribune.com